Apple Debuts New Apple TV Strategy, Streaming Media, Netflix Integration

By Tara Seals Comments
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Apple Inc. is taking another stab at facing down telcos and cable companies for the in-home TV opportunity. It unveiled a new, $99 version of Apple TV on Wednesday, which ditches content purchases in favor of inexpensive rentals and cuts the size of the box down to a quarter of its previous bulk. Steve Jobs famously has called Apple TV a “hobby" compared to the company’s other initiatives, but that status may be about to change.

With Steve Wozniak looking on from the audience, Jobs took the stage at Apple’s annual music-focused press event, and said consumers “want the hardware to be silent, cool and small. While he acknowledged that Apple TV has been less than a resounding success to date, he said the company is responding to the market now.

Notably, the device – which is about the size of two iPhones placed side by side – hooks into the television and requires no synching with a computer — everything can be streamed OTA. Content will now be cheaper (99-cent TV episodes from Fox and ABC, and $4.99 first-run movies will be available on iTunes), and the box incorporates Netflix streaming (a big plus) and YouTube, along with iTunes audio and photo streaming. It’s generally a compelling offering for television viewers, who simply want to be able to flip on their TV and watch what they’d like to, on-demand. The pricing scheme stacks up nicely to cable subscription and on-demand movie options, though the content stable is admittedly a bit shallow for now. While ABC and Fox are the only two studios offering Apple the cheap episodes, "we think the rest of the studios will see the light and get on board with us," said Jobs.

Because the content is rented and not purchased, the second-generation box eliminates the need for big hard drives, content management systems and a large form factor. That means the hardware and support costs are cheaper — which is why Apple is able to knock $200 off the previous pricing. Apple TV is available for pre-order and will ship in four weeks.

There was some synergy in the room with other lines of businesses, another potential red flag for operators. Jobs also unveiled upcoming functionality for iPad, iPhone and the iPod Touch, including AirPlay, which will let users stream audio and video, and push pictures, to other devices via Wi-Fi. AirPlay, part of the iOS 4.2 mobile device OS that will be released in November, is a refresh of the existing AirTunes functionality. It adds the video and photo streaming support and works in a two-way fashion: It lets music and video stream from a computer to an i-device too. And the 99-cent TV show rentals from Fox and ABC meanwhile will be available starting next week, which will make the AirPlay streaming capability that much more interesting when it comes along later in the year. Imagine renting a (cheap) TV show and streaming it to an Internet-connected TV, for instance.

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